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Killing jobs and cutting wages does not help workers

If Delaware wants to understand the ramifications of various employer mandates featured on many platforms this election season, they can look north to Connecticut. Connecticut’s proposed bills in 2018 included family and medical leave, expanded paid sick leave, and minimum wage hikes. The implementation and compliance costs of these mandates to taxpayers and businesses were estimated to be up to $530 million.

Connecticut Business and Industry Association President and CEO Joe Brennan expressed concern that long term talks about the difficulty of having one-size-fits-all mandates on employers applied to these bills as well. Added costs and administrative burdens expected to accompany these and similar measures are bad news for an economy as businesses will be forced to lower wages or cut jobs entirely.

You hear people ask, “Why not mandate that employers can’t do these harmful things?” Unfortunately, these things cost money that has to come from somewhere. Businesses are experts in finding ways to be able to stay afloat and keep their doors open and will have no option but to make cuts if saddled with these costs.

Connecticut’s paid leave benefits were set to be funded by mandatory deductions from employee wages, exchanging income for benefits. On top of this, taxpayers would fork over $18.6 million annually to administer these plans. The costs impact more than just the employees and tax payers: businesses’ bottom lines will be impacted, especially for companies that are operating on very small profit margins, like small businesses.

So what can businesses do?

The easy answer is to cut wages or cut jobs to make up the additional costs. Automation is rapidly expanding in the business world, and is a cheaper option in the long term to having increasingly expensive, and often unreliable, human labor. Robots could occupy 38% of jobs in the U.S. economy by 2030, and boost productivity, manage labor costs and improve operational predictability for large and small businesses. Small businesses like transportation and storage, manufacturing, retail and other industries, are the most likely to adopt these changes in the near-term. They’re also the ones who will be hardest hit by the proposed employer mandates.

In addition to or to avoid layoffs or automation, businesses could also raise prices to pass the cost onto the consumer. In this instance, the business still faces higher costs, but now the tax payer is paying twice to fund these mandates. If the costs become too high and sales suffer, layoffs are back on the table.

You can’t force a company to hire associates but you can certainly force them out of a burdensome state or country they can no longer afford to operate in—and they’ll take their jobs with them.

When our workers, small businesses, and overall economy are already struggling to get back on their feet after COVID, anything that could provide such widespread damage should be off the table. The 2021 Legislative Session should focus on helping Delaware workers and businesses, not forcing them into unemployment and bankruptcy. This election will determine if our workers and businesses can recover, or if costly and burdensome mandates will cause more job loss and small business struggle. Delawareans must make the best choice for the future this November.

As Delaware’s bioscience sector grows, space is in short supply

From Delaware Business Times

From the earliest scientific advancements made at DuPont more than two centuries ago to the brand-new cancer therapies being developed by Incyte, Delaware has a long history of laboratory-based research and development.

As the competition for those future-billion-dollar companies heats up, however, the First State is often at a disadvantage when it comes to retaining such startups. The state has fostered an environment of innovation, often connected through the University of Delaware, but it is now watching expanding companies seek out-of-state spaces to further their growth due to a lack of resources here.

According to a recent survey of 60 companies that utilize labs by the Delaware Prosperity Partnership (DPP), the state’s economic development agency, 12 anticipate needing more lab space within the next three years, totaling about 150,000 square feet. Only half of those companies said that they could accommodate that growth currently though, meaning tens of thousands of square feet of lab space need to be developed.

It’s not just about meeting the needs of Delaware’s current companies, however, but also attracting new prospects. DPP officials reported that over the past two and a half years, it has worked with 30 companies that were seeking lab space. It currently has 12 such companies in the pipeline, the majority of which need “graduated” lab space, or facilities containing more advanced features, measuring between 10,000 and 30,000 square feet. If able to be located, they could create upward of 400 well-paying jobs.

The challenge now is to continue to grow the innovative ecosystem for research in Delaware while also investing in new lab development to support their scaled growth. Neighboring competitors Maryland and Pennsylvania, which are home to hundreds of bioscience companies and have decades of financial backing and resources at their disposal, are ready and willing to poach those companies if progress isn’t made.

Bill Provine, president and CEO of the Delaware Innovation Space, a nonprofit incubator and accelerator that is home to 18 companies at the DuPont Experimental Station, agreed that more labs were needed in the state and that government aid may be needed to spur it.

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Policies will allow outdoor dining options in Rehoboth

From Delaware State News

REHOBOTH BEACH — As the weather starts to cool, Rehoboth Beach restaurants will be able to use outdoor space with heaters for dining options.

The Rehoboth commissioners approved a policy regarding the use of outdoor space Tuesday.

Restaurants must have a straight and continuous minimum of 5 feet of sidewalk in front of any outdoor seating that must be maintained at all times. Space allows pedestrians to move up and down the sidewalks without adjusting their path because of the outdoor seating.

The approved policy also requires that outdoor tables be set 8 feet apart from each other. A barrier is needed between the tables and the pedestrian path if a restaurant is serving alcohol. Commissioners also approved tents and canopies without sides to be used in outdoor dining areas.

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University of Delaware employees to take 5% pay cut for remainder of fiscal year

From Delaware Online

University of Delaware’s non-union employees will all take a 5% pay cut for the remainder of the fiscal year, the latest in a string of efforts to shore up the school’s projected $250 million financial deficit brought on by the COVID-19 pandemic.

The pay cut will come in the form of nine furloughed days: three days before Thanksgiving, three before Christmas, and three at employees’ discretion.

The salary reduction will be evenly spread through paychecks, starting Nov. 1 until the end of June 2021.

Two weeks ago, the university announced that it was facing a budget deficit of about $250 million, as significant revenue loss and increased expenses from the pandemic strained finances.

At the time, employees were offered a voluntary retirement option. Since then, 138 employees have expressed interest in early retirement, and will receive final approval tomorrow.

Over the summer, senior administrators at the university took a 10% pay cut. Thursday’s cut will be in addition to that.

Some units may face a salary reduction greater than 5%, the university said in a message to faculty and staff on Thursday. Future workforce reductions, restructuring and other cost-saving measures could be announced down the line.

The pay cut does not apply to student employees, postdoctoral fellows or anyone on an H-1B visa. The university continues to negotiate with faculty and other unions.

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Medical facility takes shape: Commercial development booming along Del. 1 in Milford

From Delaware State News

MILFORD — There’s a lot of commercial development happening in Milford, and that growth may be clearest to those passing by the town’s Silicato Parkway exit off Del. 1.

That’s where Silicato Development is nearing completion on a medical building near Grotto Pizza and Royal Farms.

“It’s projected that the building will be completed at the end of 2020, so we will be starting a few of the tenant build-outs soon,” said Nicole Silicato Miller, the vice president of Silicato Development.

She hopes the facility will bring 50 to 60 new jobs to the area and said the building is already 25% leased out.

“I’m not releasing the tenant names yet, but we do have local family practitioners who are leasing in the building, and a boutique pharmacy … about to sign a lease, which is something I really wanted to do on the first floor,” Ms. Silicato Miller said.

A Dolce café will be located in the lobby, supplementing its main location in downtown Milford.

“I wanted to have a boutique pharmacy with the coffee shop so you can do that one-stop shopping in the building,” Ms. Silicato Miller said. “You can go to your family practice, you can go to pharmacy and you can grab a sandwich, and it’ll be a nice, pleasant experience.”

She thought a local coffee shop with a good reputation in the community would suit her vision best.

“I reached out to Stephenie and Dean Tatman,” Dolce’s owners, Ms. Silicato Miller said, “and they were extremely interested. They signed an intent to be in the building a year and a half ago, before the plans were even done.”

Ms. Tatman hopes the new location will attract beach traffic.

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Employer mandates: mandating job and income loss

Paid leave and similar employer mandate policies have risen in popularity over the past few years, and really came to the forefront during the coronavirus pandemic. On the surface, these measures will help workers (especially low and middle class) provide for and tend to their families. In reality, they will hurt businesses, cost jobs, and lead to lower wages.

An alternative option would be to allow the private sector to come together to either establish insurance plans that would cover short-term disability or paid family leave plans or allowing lower-income hourly workers to choose if they would want to convert overtime pay to paid leave. If we want to help workers, we should do so in a way that actually helps them.

Especially now, as businesses are struggling to recover from the economic crisis that accompanied the COVID-19 pandemic, employers cannot afford this burden. Losing your job is worse for a worker than losing a paycheck from not having paid sick leave or a paid family leave mandate.

Unfortunately, these platforms leave out a very important part of these types of mandates: the costs that will be placed on employers will end up hurting the very people they are seeking to help. Economic analysis and economists—both liberal and conservative—agree that the main people who pay for employer mandates are employees.

The cost of the health care provided to the employee does not result in more productivity or value of that employee at their firm. By adding this cost, it is more likely that incomes will be lowered in order for the total value of the employee to remain the same, even with additional costly mandates. Sometimes, the cost of these mandates results in layoffs so that the company can afford to provide them to the remaining employees.

So why do politicians who claim to advocate for workers support ideas that will hurt them? Well, it’s easy to support something that sounds good and has hidden consequences and costs.

For low income workers, employer mandates like health insurance mean far higher costs for the employer and a higher likelihood of layoffs. Since people cannot be paid less than minimum wage, the higher costs are forced onto employers who will have to adjust for these costs by laying off workers or cutting hours.

In a 2019 New Hampshire bill to implement a government-administered paid family leave program, a new tax was included to help cover the costs of the mandate. However, the tax that would cost the average worker an extra $267 per year only covered one fifth of the cost of the mandate. In this instance, employees would lose earning from both the tax and whatever cost-cutting measures their employer would be forced to take.

The costs aren’t just monetary.

If an employer has two applicants for a job and one appears more likely to take advantage of a mandate like parental leave (young, female), it might reduce the employer’s willingness to hire that person. Hiring a young woman then becomes a cost burden that an employer may not be willing to take on. In turn, this mandate intended to provide a benefit ends up leading to discriminatory hiring practices and higher unemployment in a new group.

When making decisions that impact businesses, lets allow businesses to contribute ideas for better solutions that benefit employers and employees alike. The government is not the answer to every question.

Will Delaware’s certificate of need law fall in 2021?

From Delaware Business Times

DOVER – Opinions about Delaware’s requirements for certificates of need (CONs) for large medical expenses vary so much that at first glance some stakeholders don’t seem to be talking about the same issue.

Dr. Chris Casscells, policy director for the Caesar Rodney Institute, calls it “a blunt-force instrument that has been brutal to the price of health care in Delaware” and therefore should be eliminated.

“It never did its intended goal,” he said of the law.

Casscells wants the marketplace to judge, and noted that in the late 1990s, when the system was temporarily unfunded, multiple freestanding surgery centers were created.

Wayne A. Smith, CEO of the Delaware Healthcare Association (DHA), which represents hospitals and allied organizations, supports the intent of the regulatory process, but recommends operational changes involving quorums and staff experts.

And state Rep. Lyndon Yearick, a Kent County Republican, has changed his mind over the last five months to embrace the free market.

“If there’s a health care institution that’s willing to risk their capital and assets, I don’t know of any reasons why there should be any restrictions,” he said.

Certificates of need were put into the spotlight in 2019, when Bayhealth and Beebe Healthcare proposed emergency departments on U.S. Route 9 in Sussex County, within 10 miles of each other. The Delaware Health Resources Board, which hears applications for the projects and rules on their permissibility, denied Beebe’s application, while Bayhealth withdrew its application before a vote.

Delaware passed a CON law in 1978, following a 1975 federal mandate that such laws would improve the delivery of health care. The federal law was “based on the economic assumption that excess health care capacity directly results in health care price inflation,” a 240-page report by legislative analysts for the Joint Legislative Oversight and Sunset Committee concludes.“States established CON programs to restrain health care costs and allow for coordinated planning of new services and construction based on a genuine community need,” the report continues. “CON programs also emphasized the importance of distributing health care services to disadvantaged populations or geographic areas that may be ignored by new and existing facilities.”

A later federal review found the law didn’t generate the desired outputs, so the U.S. government backed off in 1987, and a dozen-plus states have since dropped their CON laws.

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U.S. Corrugated plans $80M Dover plant

From Delaware Business Times

DOVER — U.S. Corrugated plans to build an approximately $80 million corrugated cardboard box manufacturing plant near Dover while relocating its longstanding New Jersey operations to the First State.

With aims to break ground in November, the 497,000-square-foot “super plant” will be located on a 40-acre parcel between Camden and Dover, bordered by Route 15 and the POW/MIA Parkway. U.S. Corrugated founder and chairman of the board Dennis Mehiel envisions a facility featuring the latest in industry-leading technology.

It’s estimated that once U.S. Corrugated of Delaware is operational, it should bring around 150 jobs to the Dover area. Mehiel said that U.S. Corrugated will close its 35-year-old, full-line box plant in Newark, N.J., and plans to transfer operations to the new Dover plant by the end of 2021. Preliminary plans show the site at roughly 110 loading docks and potential to expand the building footprint somewhere down the line.

“We’ve had tremendous upgrades since we opened our New Jersey facility, and it’s been upgrading in leaps and bounds in the last 20 to 25 years,” Mehiel told the Delaware Business Times. “There’s substantial opportunity to grow in Dover to meet significant demands we will face in the next two to three years.”

Once the Dover manufacturing plant is fully operational, it would have the capacity to produce approximately 250% more boxes than the Newark facility and bring in $120 million in additional revenue per year, he said.

The project still has to clear the permitting process with state, county and city entities in the near future. Delaware Prosperity Partnership President and CEO Kurt Foreman noted that his office collaborates closely with Delaware and  Dover officials as well as the Kent Economic Partnership to help bring industrial and manufacturing operations to Central Delaware, and he is pleased to continue moving forward to potentially bring another company to the state’s capital. The DPP and its partners have been actively working with U.S. Corrugated of Delaware team since early 2020.

“We are excited to see the progress being made toward a possible facility in Dover, but several key steps remain to complete. DPP looks forward to sharing and celebrating the good news once everything is completed,” Foreman told DBT.

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State Labor Department announces extension of jobless benefits

From Delaware Business Now

The Delaware Department of Labor announced the extension of unemployment benefits, triggered by Delaware’s high jobless rate.
Delaware’s three-month averaged, seasonally adjusted unemployment rate as of August 2020, is 10.6 percent.
Delaware has ranked at or near the top 15 among the 50 states in its jobless rate since the Covid-19 pandemic took hold in March.
Primarily federally funded, the “High Extended Benefits” program kicks in when the state’s unemployment rate averages eight percent or higher for three consecutive months. It offers claimants an additional seven weeks of extended benefits for a total of 20 weeks.
It also extends the Pandemic Unemployment Assistance program for another seven weeks, offering a total of 46 weeks of unemployment insurance benefits to eligible Delawareans.
State Labor Secretary Cerron Cade said, “This expansion of benefits will provide much needed assistance for Delawareans whose eligibility for Extended Benefits was due to expire at the end of September. With the expiration of the Federal Pandemic Unemployment Compensation and the short period during which the FEMA Lost Wage Assistance program is active, this provides seven additional weeks of the safety net for the long-term unemployed. This extension of benefits will help workers for as long as the state remains above the three-month average threshold.”

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Goldman Sachs to expand consumer finance business to Wilmington’s Riverfront

From Delaware Online

Goldman Sachs’ expansion into retail lending is bringing a sliver of the investment bank’s operations into the credit card hot spot of Delaware.

Officials at the storied 150-year-old bank said they are securing a temporary lease for offices along the Wilmington Riverfront to house the company’s initial set of Delaware hires, estimated at 25 to 50 people.

The company plans to employ about 150 people in Wilmington at the end of next year, said Chantal Garcia, chief operating officer for Goldman Sachs’ Consumer Business.

Garcia declined to disclose the exact location of their initial office along the Riverfront, but noted it would be a small space. Later, the company will move to more expansive offices, she said.

“We have not yet determined … our long-term location, in part, because there are potential other businesses or partners within the firm that may be interested in co-locating with us,” Garcia said, noting that compliance operations might also expand into Delaware.

The news is certain to be welcomed by city and state officials, who have poured hundreds of millions of dollars over 25 years into a transformation of the Riverfront, once a declining industrial area.

While today it features modern offices, apartments and restaurants, the revitalization of the city’s overall core has been plagued in recent years by a roller coaster of restructuring within the financial services industry.

Last year, the British bank Barclays moved 500 Riverfront jobs to New Jersey.

In June, Delaware officials announced plans to give the bank $2.5 million in taxpayer grants to create another 300 jobs in Wilmington.

Garcia said Goldman Sachs last week began conversations with the state’s private economic development agency about potential incentives.

She said Goldman Sachs is committed to Delaware, whether or not it receives taxpayer grants. She noted the company already has extended offers to a portion of what will be its new Delaware workforce.

Goldman Sachs’ officials chose Delaware over locations in Texas, Utah and Illinois, Garcia said, because of the state’s substantial pool of finance workers, its relatively low cost of living and its proximity to the bank’s headquarters.

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